Titania Co. sells $400,000 of 12% bonds on June 1, 2012. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2016. The bonds yield 10%. On October 1, 2013, Titania buys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries through December 1, 2014.
Instructions
(Round to the nearest dollar.)
- For the case prepare all of the relevant journal entries from the time of sale until the date indicated.
- Use the effective-interest method for discount and premium amortization (construct amortization tables
- where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing